This weekly newsletter pulls together summaries of the top ten most-read Insights across Macro and Cross Asset Strategy on Smartkarma.
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1. Positioning Watch – Turmoil in Markets Is Returning
- Hello everyone, and welcome back to our weekly positioning watch.
- The divergence between market-cap weighted and and non market-cap weighted indices is slowly normalizing, but the impact that NVIDIA (and some of the other big tech firms) has on both broad equity returns is notable with the 5 largest companies in the S&P 500 accounting for roughly 30% of the index by now.
- This does not only have implications for the distribution of returns between bigger indices (Nasdaq vs Dow Jones for instance), but also on indices option volatility, with the VIX ex NVIDIA hitting lows of around 9 in May (2017/2018 lows).
2. EM Watch: The China bet and the copper story are both old hat by now
- Welcome to our weekly EM editorial where we travel across the liquid EM markets in the context of recent developments in USD markets.
- ISM Services jumped back to 53.8—time to put that recession chatter to bed for a few months again?
- Bloomberg’s latest alarmist piece on “business employment dynamics” showing a net job loss in Q3 of last year is probably the worst analysis I have read in a while.
3. Steno Signals #102 – Bad inflation news everywhere
- Happy Sunday and welcome to our weekly flagship editorial.
- The inflation progress has stalled, and it is not just a US phenomenon.
- It is spread to Europe and with freight rates rapidly on the rise, we are likely no longer getting any help from goods inflation in coming quarters.
4. The Week at A Glance: The comeback of the (growth and inflation) cycle
- Welcome to our short and sweet weekly overview of key events, our expectations and how we position for them.
- On ISM Manufacturing (Monday). Our forecast at Steno Research is 50.2 for the ISM Manufacturing Index, slightly above the consensus of 49.9.
- April’s activity was notably weak due to several factors: tax seasonality which withdrew liquidity, a hawkish build-up of expectations ahead of the early May FOMC press conference, and weak international impulses.
5. Is that It? Commodity Bull Market Over?
- Recent signs of economic weakness in the US is a believable narrative for the current weakness
- OPEC + announcement on increasing production adds to the noise
- Weakness spreads from the energy sector to other commodity sectors
6. Market Trends and Strategy: Hong Kong Bull Market Broadens
- High dividend yield names continue to outperform the broader market. Energy and Materials sectors are best performers over the last year.
- Mainland buying has continued to buoy the Hong Kong market even through the pullback in May.
- Short selling is declining and market breadth is increasing supporting rotational buying between sectors.
7. ETFs Are Reaching Way Beyond Passive Investing
- ETFs are synonymous with passive investing. It passive investing and beyond. ETFs have been stealing breakfast, lunch and dinner away from mutual funds.
- Active ETFs have jumped from obscurity to ubiquity. >70% of new ETF launches in the US over the last seven years have been active ETFs.
- Active ETFs in the cheapest quintile command AUM of USD 325 billion while those in the most expensive quintile hold merely USD 35 billion.
8. May Themes and Thematic Portfolio Review
- A monthly review of how the markets and our themes are currently performing
- Analysing what went wrong and what went right in stocks and sectors
- Highlighting positions added or removed from the thematic investment portfolio
9. Impact of China’s Economic Deceleration on EM Economies
- China’s economic growth is expected to decelerate from the previous high-growth period in the 2000s and early 2010s. This will have an impact on other EMs.
- We track the impact from the angles of China’s commodity imports, supply-chain position, and foreign investment.
- Commodity producer countries can be more heavily impacted. The impact on Asia will be mixed, suffering from regional trade, but some supply chains could be diverted away from China.
10. India Politics: Setback for Modi Heralds Era of Uncertain Coalition Politics
- The ruling BJP suffered major losses in the recent elections. It fell short of an overall majority and will have to rely on regional partners to form the next government.
- Consolidation of the anti-BJP vote under the aegis of the INDIA coalition delivered dividends, but voters also were not enthused by Modi’s economic and social campaign rhetoric.
- Expect short-term uncertainty as the major blocs attempt to cobble together parliamentary majorities. But more political checks and balances would be good for India.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.
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1. Nvidia Earnings Overview: Networking in Focus
Nvidia reported earnings, and as expected, they beat earnings. Did you think that Jensen would fail us now?
On a more serious note, the guide was a bit light regarding buy-side bogeys, but there is almost nothing to complain about this result.
Below is the StreetAccount summary, and you can see it’s a clean beat by every metric.
2. Qualcomm Leapfrogs Intel & AMD To Power The First Microsoft CoPilot + PCs
- Microsoft last week launched their CoPilot+ PC category which enables their CoPilot to run locally on your PC, as long as it has an NPU with >40 TOPS
- With Qualcomm being the only one currently offering such an NPU, their Snapdragon processors will be powering the first wave of CoPilot+ PC’s
- It’s an extraordinary accomplishment for Qualcomm & likely an inflection point for Arm powered PCs. It’s also really bad news for Intel and not great for AMD
3. Taiwan Tech Weekly: TSMC’s Latest Sub-Industry Guidance; PC Names Strong; Computex & Apple WDC Ahead
- TSMC’s Latest 2024E Industry Guidance Provided at Symposium in Taiwan
- More Potential Details on Nvidia & Mediatek’s AI PC Chip to Compete with Qualcomm & Intel
- Samsung’s HBM DRAM Chips Face Challenges in Meeting Nvidia’s AI Requirements
4. TechChain Insights: Call with Himax, How New In-Car Displays Can Quadruple Chip Content Per Vehicle
- We hosted a conference call recently with Himax management, the global leader in automotive touch display controllers; the company is experiencing a uniquely stronger automotive supply/demand environment than some peers.
- Discussed in detail how larger or more sophisticated interior displays can drive higher dollar content of display controllers per vehicle. We examine trending new car designs with much larger displays.
- We forecast an exponential jump-up in display controller content value per vehicle as beautiful display designs are becoming key USP for auto brands; Maintain our Structural Long rating for Himax.
5. UMC (2303.TT; UMC.US): The Outlook for 2024 Could Show Flat to Low Single-Digit Growth.
- UMC is currently forecasting a flat to low single digit growth QoQ for 3Q24, which is slight lower than consensus.
- UMC has received orders from domestic and international clients. However, we believe it couldn’t be able to compensate for the loss of Samsung’s 28nm orders so far this year.
- With accelerated construction in Singapore in 2024, the full-year capital expenditure has slightly risen to $3.3 billion.
6. Qualcomm. Watch This Space…
- Automotive revenues for Q1CY24 amounted to $603 million, up 35% YoY. This compares to MobilEye’s revenue of $239 million, down 48% YoY
- Automotive design-win pipeline is now $45 billion, up from $30 billion less than two years ago
- CEO Amon said “Every time we enter a new market, we end up building a very strong position”. That’s a shot across the bows for Intel and AMD…
7. Tech Chain Insights: Call with ChipMOS, Memory and Display Markets Color
- We hosted a conference call recently with ChipMOS management; the company continues to view 1Q24 as having been the bottom for the memory and display markets.
- Memory customers are increasing utilization further. Since ChipMOS does not significantly serve the HBM DRAM market, this indicates that previously softer non-HBM memory segments are now showing improvement.
- Display industry increasing utilization on expectation for 2H24 large display demand strength driven by sporting events such as the Paris Olympics. ChipMOS remains well below March highs, rate as Outperform.
8. An Interview with Dan Kim and Hassan Khan of the CHIPS Program Office
- I had the opportunity to talk about the CHIPS Act’s progress with two people at the program office.
- I really think this is a great step in the right direction, and we talk about some of the misconceptions of the CHIPS program, and more.
- Today will be a pretty special interview podcast, and I have Dan Kim and Hassan Khan from the CHIPS program.
9. Taiwan Tech Weekly: Computex & Apple WDC Imminent; Apple Releasing New AI Voice Interface for IPhone
- Market Largely Influenced by Macro Trends and Nvidia Movements This Past Week
- Key Events: Computex, Apple WDC, Key Taiwan May Revenue Releases
- Apple (AAPL US) Is Overhauling Siri In Order to Create a Beautiful Voice-based AI Interface for the iPhone
This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.
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1. Exedy Corporation Placement – Relatively Large One, Although Buyback Should Aid Share Price
- Aisin (7259 JP) is looking to raise US$290m from selling its entire stake in Exedy Corp (7278 JP).
- While the selldown doesn’t seem to be particularly well-flagged, this appears to be another cross-shareholder unwind in Japan.
- In this note, we will talk about the placement and run the deal through our ECM framework.
2. Barito Renewables Lockup Expiry – US$8bn Lockup Expiry for Largest Indonesian Market Cap Stock
- Barito Renewables Energy (BREN IJ) raised around US$200m in its Indonesian IPO, after pricing at the top end at IDR780/share. Its eight-month lockup will expire on 29th May 2024.
- Barito Renewables (BR) is Indonesia’s largest geothermal power producer, and the third-largest globally by installed capacity, as per the firm.
- In this note, we will talk about the lock-up dynamics and updates since our last note.
3. Alibaba/JD.com: Thoughts On The Recent Convertible Bond Issuance
- Alibaba Group Holding (9988 HK) and JD.com (9618 HK) both announced the issuance of convertible debt last week (Alibaba on May 23 and JD.com on May 21).
- Both have mentioned that the reasons for the issuance are the low funding cost (0.25% coupon for JD.com and 0.5% for Alibaba) and to fund their current share repurchase program.
- I think the convertible debt structures makes sense and it is beneficial for both companies to buy back as much as possible at the current share price.
4. Shift Up IPO – Thoughts on Valuations – Bear/Base/Bull
- Shift Up (462870 KS) plans to raise up to US$320m in its South Korean IPO.
- Shift Up is a South Korean games developer, which as released three games so far for the global markets.
- We have looked at the company’s performance in our past notes. In this note, we talk about valuations.
5. Shift Up IPO: Valuation Insights
- Shift Up (462870 KS) is Korea’s leading game development studio. It is seeking to raise up to US$320 million.
- We previously discussed the IPO in Shift Up IPO: The Investment Case.
- We examine the syndicate’s valuation methodology. Our analysis suggests that Shift Up is attractively valued in the IPO price range. We would participate in the IPO.
6. Shift Up IPO: The Investment Case
- Shift Up (462870 KS) is Korea’s leading game development studio. It is seeking to raise up to US$320 million.
- Shift Up now focuses only on game development and has a policy of publishing games in cooperation with global partners such as Tencent (700 HK) and Sony Corp (6758 JP).
- The investment case rests on a stellar game development track record, several growth drivers, high profitability and cash generation.
7. Hoshino Resorts REIT Placement – Another Raising to Fund an Accretive Acquisition
- Hoshino Resorts Reit (3287 JP) is looking to raise US$125m from a primary follow-on. Proceeds will be used to acquire the OMO7 Osaka asset.
- The REIT has been active on the acquisition front, undertaking a number of capital raisings in recent years.
- In this note, we will talk about the placement and run the deal through our ECM framework.
8. Shift Up IPO – Peer Comparison – Small in Size but Ranks High on Growth and Margins
- Shift Up (462870 KS) plans to raise up to US$320m in its upcoming South Korean IPO.
- Shift Up is a South Korean games developer, which as released three games so far for the global markets.
- In our previous note, we looked at the company’s past performance. In this note, we will undertake a peer comparison.
9. ASMedia GDR Offering – Well Flagged, and Momentum Has Been Strong Leading into the Offering
- Asmedia Technology (5269 TT) is looking to raise up to US$335m in its global depository receipts (GDRs) offering.
- Overall, the deal would be a relatively small one for the stock to digest at just 5.6 days of its three month ADV.
- In this note, we run the deal through our ECM framework and comment on deal dynamics.
10. ECM Weekly (27th May 2024) – Renesas, AUB, Modec, Tata Tech, MUFG, Shift Up, Novelis, Shulan
- Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
- On the IPO front, Go Digit managed to do well despite somewhat tepid subscription rates, while Shift Up (462870 KS) was looking to be the next hot listing in Korea.
- On the placement front, Renesas Electronics (6723 JP) mega-block kept the cross-shareholding unwind going.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.
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1. Cash-Rich Exedy (7278) Sees Huge Offering Offset by Huge Buyback – Watch For Short-Term Games
- Toyota equity affiliate Aisin (7259 JP) last September said it would sell all its crossholdings. That now includes a 36.5% stake in Exedy Corp (7278 JP).
- Today, they announced an offering of all the shares (when including the greenshoe). That is nearly ¥50bn. That is offset by a ¥15bn buyback which could reduce the offering size.
- Games may be played, but there is considerable accretion, and Exedy will see higher float and still-high net cash.
2. TIP Customized Taiwan Select High Dividend Index Rebalance Preview: AUM Jump & HUGE Trade
- The TIP Taiwan Select High Dividend ETF (00919 TW) tracks the TIP Customized Taiwan Select High Dividend Index and has an AUM of TWD 209bn (US$6.5bn).
- There could be 14 changes for the ETF in June with an estimated one-way turnover of around 40% and a round-trip trade of around US$5bn.
- The potential adds have outperformed the potential deletes over the last couple of months and there could be more to go heading into announcement and implementation.
3. Infocom (4348 JP) – The Meaning of ‘Binding Bids’ and ‘¥250bn’
- A variety of articles of recent from private media sources have suggested that Teijin Ltd (3401 JP) has its 55% stake in Infocom Corp (4348 JP) up for auction.
- According to earlier articles, binding Second Round bids were due last week. According to an article out late last week, binding bids have been made, with some “around ¥250bn.”
- What that means for price may depend on what the “around ¥250bn” means. A brief exploration below.
4. Yuanta Taiwan Div+ ETF Rebalance Preview: 5 Changes as Names Move Around; US$2.35bn Round-Trip Trade
- With the review period now complete, there could be 5 changes to the Yuanta/P-Shares Taiwan Dividend Plus ETF in June.
- Price changes and changes to dividend estimates have led to names dropping off the list of potential adds and deletes over the last week.
- Constituent changes, capping and funding flows will lead to a one-way turnover of 12.7% and a one-way trade of US$1.17bn. There are 12 stocks with over 4x ADV to trade.
5. Infocom (4348 JP) – Reports of an Exclusive Negotiation May Give Hints
- The entire saga here of Teijin Ltd (3401 JP)‘s disposal of its 55.1% stake in Infocom Corp (4348 JP) is being played out in the non-generally-public press.
- There is reportedly a new piece of writing out late Thursday which suggests an approach.
- I wrote about the “meaning” of words in Infocom (4348 JP) – The Meaning of ‘Binding Bids’ and ‘¥250bn’ and now there is more nuance to parse.
6. Taiwan Top 50 ETF Rebalance Preview: Asia Vital Components (3017 TT) In Back-To-Back Inclusion?
- Asia Vital Components (3017 TT) could replace Chang Hwa Commercial Bank (2801 TT) in the Yuanta/P-Shares Taiwan Top 50 ETF at the June rebalance.
- This ETF inclusion for Asia Vital Components (3017 TT) could come back-to-back with another index inclusion scheduled for the end of May.
- Shorts in Asia Vital Components (3017 TT) have been increasing recently while shorts in Chang Hwa Commercial Bank (2801 TT) are near their lows.
7. S&P/ASX Index Rebalance Preview: Regular & Ad Hoc Changes in June
- With the review period complete, we take a look at the potential index changes at the June rebalance as well as potential index inclusions due to M&A.
- Timing is key for the ad hoc inclusions to the S&P/ASX 200 (AS51 INDEX) with an ad hoc inclusion being announced prior to the regular announcement.
- Passive trackers will need to buy 1.3-27x ADV on the expected adds and have 0.8-4.7x ADV to sell on the expected deletes. Shorts have built up on the potential deletes.
8. Exedy (7278) Huge Offering Resized – Watch the Dynamics Here
- On Monday 27 May, Aisin (7259 JP) announced an offering to sell ALL of its 36+% stake in equity affiliate Exedy Corp (7278 JP) for likely ¥40bn+.
- Exedy announced a big buyback to go with it. It bought back 30% of the total on Weds morning, and that reduced the size of the offer.
- I had expected “short-term games” but we haven’t really had them. Which is a bit weird. This update shows the details and dynamics (they differ).
9. KRX Announces Final Version of Value-Up Disclosure Guidelines Alongside Dedicated Website Launch
- Starting May 27th, KRX-listed firms can voluntarily disclose value-up details, publicly available on the website. Additionally, view five investment indicators for all KRX-listed companies below.
- Finalized version similar to draft, with added content requested by listed companies, like R&D investment growth rate. Tax incentives excluded, awaiting alignment with Ministry’s plan in July.
- KRX keeps a screening framework for the index akin to March’s criteria, with ROE likely having the highest weight. Recent signals hint at increasing dividend weighting.
10. Kansai Paint (4613) – Going Hard with a BIG Buyback and More Capital Moves Beyond
- 24mos ago, Kansai Paint (4613 JP) announced a new MTMP, a large buyback, and plans to unwind cross-holdings. Big. 15mos ago a large secondary offering kicked off the festivities.
- Key was Toyota sold. Then KP could sell its Toyota shares – two-thirds of its cross-holdings. The offering was one to buy. A buyback followed. KP vs Nippon Paint doubled.
- KP offered a CB recently with the delta hedge done by TN-3. Now there is a HUGE new buyback. Really big. This gets rid of more cross-holders. And there’s more.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Macro and Cross Asset Strategy on Smartkarma.
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1. Positioning Watch – AI (NVIDIA) is overshadowing everything else
- Hello everyone, and welcome back to our weekly positioning watch.
- Equities have been dragged higher over the past week after NVIDIA published yet another earnings surprise, and markets were funnily enough buying into other Tech equities on the back of NVIDIAs earnings – strengthening the argument as to why AI / NVIDIA has proven to be a major driver in the equity space.
- Every single time NVIDIA or other GPU companies’ earnings surprise positively, we are witnessing a subsequent boom in the amount of AI related news, which are rapidly increasing at the moment.
2. Korea Exchange Launches the Disclosure of Corporate Value Up Program on KIND System
- The Korea Exchange introduced the Corporate Value Up program on the KIND website. This is a voluntary system aimed at boosting the corporate value of listed Korean companies.
- Five key investment indicators for the 2,400+ listed Korean companies include PBR, PER, ROE, dividend payout, and dividend yield. The detailed data these indicators can be easily downloaded on excel.
- Corporate Value Up program is a marathon, not a sprint. In this race, the runners (Korean companies) also need some water (such as improvements to dividend/corporate income tax policy).
3. Ifo Watch – Is Germany rebounding against all odds?
- The nationwide figure was released today at 14.00 CET, and despite headline CPI surprising a tad dovish compared to consensus of 0.2% MoM, we had the right lean on overall price pressures with rates markets clearly viewing the report as hawkish news with the longer end of the yield curve selling off.
- In general regional figures showed a slight dovish surprise in headline terms, which is de facto the mandate of the ECB, but core prices and key components of the HICP basket were not a pleasant surprise for policymakers, which will likely weigh on the rhetoric from ECB in their June meeting.
- Notably we saw a slight hawkish surprise in the HICP figure compared to CPI, as the categories recreation and culture and restaurants and hotels weigh relatively more in HICP compared to CPI, while food prices weigh less.
4. How to Spot A Market Top
- We are not overly concerned about the capitulation of a prominent Wall Street bear on an intermediate-term basis.
- Stock prices are advancing on stable interest rates and continued economic and earnings growth.
- However, the stock market is showing some signs of bullishness exhaustion and it’s vulnerable to a short-term pullback.
5. Steno Signals #101 – Introducing the Washington DC Crypto Put!
- It’s been a break-through week for Crypto bros in many ways.
- First, the SEC made a massive u-turn and approved the spot ETH ETF and then Donald Trump fully endorsed the crypto space in his speech at the Libertarian Party forum over the weekend.
- Crypto has broken through to K-street and on top of the obvious positive side-effects, a BTC or an ETH is now becoming a politicized asset.
6. Portfolio Watch – Adjusting equity and commodity risks as the reflation story stalls
- Hello everyone, and welcome back to our weekly portfolio watch, where we shed light on the most important factors driving our Macro and Crypto portfolio over the past week.
- Macro Portfolio – Reflation bets have lost momentumWe have been banging the drum on a combination of slightly higher prices and a continuation of the rebound in manufacturing on a more global scale, placing bets in broad commodities and cyclical equities like Materials.
- The recent rally in BCOM has however been put to a halt over the past week, and it looks like we are in for a smaller correction in industrial metals, where clustering risks have turned more profound in copper and silver especially, as right about everyone has placed longs in the copper July contract.
7. FSC Head Remarks Short Selling Could Resume in 1Q 2025 and Launch of Financial Investment Income Tax
- On 27 May, Lee Bok-Hyun (Head of FSC) remarked that short selling of stocks in Korea could resume sometime in 1Q -4Q 2025.
- The centralized system to detect short selling of stocks in Korea on a live basis could be completed as early as 1Q 2025.
- The financial investment income tax is likely to be LAUNCHED in January 2025, which could negatively impact the local stock market.
8. China’s Housing Market: Heading Closer Towards an Eventual Bottom
- Beijing has announced a range of measures to stabilise China’s housing market, including dealing with unsold inventory through government purchases and boosting demand via lower mortgage downpayments.
- A return to the 2016-2020 boom in housing activity is unlikely, while an extended L-shaped period of healing appears to be a plausible baseline scenario.
- Improvement in homebuyers’ confidence will be crucial in achieving a market bottom, particularly lower concerns about the financial health of developers and non-delivery risks for new homes.
9. Litigation Funding as an Asset Class
- Litigation funding offers third-party financing for lawsuits in exchange for a share of the settlement or judgment.
- It has emerged as an attractive asset class due to high returns and diversification benefits.
- The market is driven by institutional involvement, technological advancements, and the rise of ESG litigation.
10. Energy Cable: A new supply side crisis brewing in Nat Gas space?
- The natural gas trade has started to move in recent weeks as the supply side looks constrained again.
- While the current situation doesn’t exactly mirror 2021, there are some similarities when we look more closely.
- Firstly, given the new supply outlook post-energy crisis, we believe there are no fundamental reasons for TTF natural gas to trade in its pre-crisis range.
Entity | Insights | Analytics | News | Discussion | Filings | Reports |
Smartkarma adds new Insight Providers to its roster, expanding the depth and breadth of its coverage
SINGAPORE, 29 May 2024: Smartkarma, the independent investment research network, is pleased to announce significant additions to its roster of Insight Providers.
The following additions further enhance the breadth and depth of global coverage available on Smartkarma, providing subscribers with actionable and data-backed insights, and offering a more comprehensive view of the global economy.
Michael Allen specializes in turnaround situations and short-ideas in the Japanese stock market. He is best known for his innovative and prescient coverage of Japanese retail companies as a sell-side analyst over a span of more than 30 years. Throughout his career, he has held leadership positions at Japan Advisory and Anova Fund, a market-neutral, sector-neutral fund.
More recently, he produced research at Macquarie Japan and Jefferies. Michael holds certificates in corporate governance from both the Board Director Training Institute of Japan and the Wharton School. His comprehensive research focuses on distressed equities in Japan, and his reports are known for their thoroughness, including forensic tests for fraudulent overstatement of assets and understatement of liabilities. Michael’s unique approach combines rigorous market and industry analysis with detailed earnings models and direct access to the analyst.
Douglas Busch is a market technician who has spent over 30 years on Wall Street. He has a diverse background, including roles in market making, proprietary trading, and foreign securities trading. Douglas specializes in independent equity research, consulting, and portfolio reviews across all asset classes in global markets. He was a nationally ranked tennis player.
His expertise lies in leveraging his deep understanding of technical indicators and market trends to offer portfolio managers actionable investment guidance and refine their timing across various asset classes, helping to uncover hidden market opportunities.
Avien Pillay is a multi-skilled investment professional with over 20 years of experience in both developed and emerging markets, particularly in the pharmaceutical sector. Throughout his career, he has held multiple roles, including Vice President of Emerging Markets at AllianceBernstein, where he co-managed a $1.5 billion fund and specialized in pharmaceuticals among other sectors. He also served as Head of Research at Old Mutual Wealth, overseeing both local and global research initiatives, and analyzed key sectors including healthcare at Cadiz Asset Management.
Avien specializes in healthcare research in both emerging and developed markets. His approach combines bottom-up and top-down analysis with a strong bias to qualitative analysis, generating actionable investment ideas.
Garvit holds an MBA in Finance and brings wide-ranging experience from a diverse professional career in consulting and finance-centered roles. As the Founder and CEO of GSBR Research, he has led the company for over 11 years, specializing in independent fundamental analysis on equities in developed markets.
GSBR Research is renowned for delivering excellence in financial modeling, initiation coverage, earnings updates, valuation, sector write-ups, and thematic research, with a proven commitment to scalability, cost-effectiveness, and quality.
Stay in the loop and check out their exclusive insights on Smartkarma.
About Smartkarma
Smartkarma is the independent investment research network that provides differentiated, independent analysis on companies, markets, and industries across the world. Smartkarma’s online platform empowers asset managers and private accredited investors who want to access market-moving, differentiated intelligence; corporates who need to maximise their outreach; and analysts who wish to reach global investors with their written reports and bespoke services. In 2021, Smartkarma received the Knowledge Enterprise Award at the Singapore FinTech Festival Global FinTech Awards. Smartkarma is backed by notable investors such as Sequoia Capital, SGX, Wavemaker Partners, Jungle Ventures, and Enterprise Singapore. Learn more at smartkarma.com
This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.
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1. Nvidia Up Sharply Again – Can This Last?
- Nvidia announced another sharp sales increase to $26 billion in quarterly revenues
- The company’s growth is far greater than hyperscaler CapEx growth, as standard servers yield to AI servers: Bad news for Intel & AMD
- Some of this may stem from an inventory build at the hyperscaler, which may lead to another Boom/Bust cycle similar to 2018 and 2022
2. Taiwan Dual-Listings Monitor: TSMC Spread Trading at New High Range, CHT Spread at Short Levels
- TSMC: +17% Premium; Has Remained Above 15% for Over Nearly Two Weeks
- ASE: +11.8% Premium; We Continue to View 14%+ as Range to Short From
- CHT: +0.6% Premium; Can Consider Shorting the Spread at Current Level
3. AMAT. No Beat, No Raise, No Slump. But Why?
- AMAT Q124 revenues of $6.65 billion, in line with guidance and essentially flat both QoQ and YoY. Current quarter guidance also flat sequentially
- WFE valuations are at all time record highs while revenues remain on life support from China
- If China revenues fall off before non-China returns to growth, the WFE segment could be in for a world of pain.
4. Hamamatsu Photonics (6965 JP): Look Cautiously to the Long Term
- The company has slashed FY Sep-24 guidance after missing 1H sales and profit targets by wide margins. Dividend maintained, 2-for-1 split planned and buyback under consideration.
- Capex has been cut, reflecting lower growth expectations. R&D also. Inventory adjustments will eventually be completed, but Chinese competiton will remain a problem.
- The share price has dropped 30% in the past year and 10.5% since May 8, putting the shares on 27 times EPS guidance. Still not cheap, but getting there.
5. Silicon Wafer Q124 Review, CY24 Outlook & Earthquake Risk
- Q124 silicon wafer area shipments amounted to 2,834 MSI, down 5% QoQ and down 13.2% YoY.
- In revenue terms, the top 4 global manufacturers reported revenues of $2.2 billion, down 10.4% QoQ and down 20.8% YoY.
- Taiwan’s recent earthquake did not impact Globalwafers shipments due to high inventory levels. However, tools were damaged, highlighting the risk of having so much wafer production in earthquake prone countries
6. Earnings Subsystems (MKSI, ICHR, UCTT), Semicap (ONTO, CAMT, AMAT, TOELY), and SiTime
Subsystems did the results you should expect, and MKSI did a questionable (and understandable) convertible offering that tanked shares right after.
All subsystems (except Ichor which sucks) look to be in a much better spot.
The summary is that Subsystems revenue should continue improving into the second half and that 2025 will be a strong year.
7. Vanguard (5347.TT): Planning to Announce the Construction of a 12″ Fab in Singapore in 2024.
- Vanguard should declare to established 12″ Fab in Singapore within 2014.
- Vanguard is likely to announce the establishment of 2 sets of 12″ fabs in the next 6 months.
- China is expanding 28/22nm and above technologies, and we believe it’s more appropriate for Vanguard to compete with others rather than TSMC.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.
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1. Renesas (6723) – Denso Selldown Starts; Fourth Large Renesas Block in 6mos (Two More To Come)
- Today post-close, Denso Corp (6902 JP) (via BofA) announced a selldown of 78,127,800 shares of Renesas Electronics (6723 JP). This is the latest in a line of block exits.
- There was the 130mm offering in November last year by INCJ. There was 123mm shares in Jan 2024 by NEC and Hitachi. A month later, 50mm shares from Mitsubishi Electric.
- In general, they have been absorbed, but one hasn’t needed to buy in the market. Some have broken price. Here, the pricing range is aggressive.
2. Shift Up IPO Preview
- Shift Up (462870 KS) is getting ready to complete its IPO in KOSPI in June 2024. Established in 2013, Shift Up is one of the leading game developers in Korea.
- The IPO price range is 47,000 won to 60,000 won. The IPO offering amount is 340.8 billion won to 435 billion won.
- According to the bankers’ valuation, the market capitalization range of the company ranges from 2.73 trillion won to 3.4 trillion won. This is the second largest IPO in Korea YTD.
3. MODEC (6296 JP): The Current Playbook
- Since the US$535 million secondary placement announcement, Modec Inc (6269 JP)’s shares are down 15% from the undisturbed price of JPY3,320 per share (14 May).
- Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Modec’s shares have followed the pattern of previous large placements.
- The offering will likely be priced on 22 May. Investors who have participated in previous large Japanese placements tend to secure positive returns.
4. Renesas Block – While Not Particularly Well Flagged, Recent Selldowns in the Stock Have Done Well
- Denso Corp (6902 JP) is looking to raise US$1.39bn from selling a portion of its stake in Renesas Electronics (6723 JP).
- DENSO’s selldown is a small one at just 4.3 days of ADV. While there is an overhang of around 4% of TSO, DENSO will be locked up for 270 days.
- In this note, we will talk about the placement and run the deal through our ECM framework.
5. Shift Up IPO – The Negatives – Changing Monetisation Model, Censorship Issues
- Shift Up (462870 KS) plans to raise up to US$320m in its upcoming South Korean IPO.
- Shift Up is a South Korean games developer, which as released three games so far for the global markets.
- In this note, we talk about the not-so-positive aspects of the deal.
6. Shift Up IPO Valuation Analysis
- Our base case valuation of Shift Up is target price of 95,510 won, which is 59% higher than the high end of the IPO price range (60,000 won).
- We believe Shift Up deserves higher valuation multiples than its peers mainly due to higher sales growth, much higher operating margins, and higher ROE.
- Since its launch in April of this year, Stellar Blade (PS console game) has ranked first in sales in eight countries, including the United States, United Kingdom, Canada, and Japan.
7. Shift Up IPO – The Positives – All Games Have Done Well
- Shift Up plans to raise up to US$320m in its upcoming South Korean IPO.
- Shift Up is a South Korean games developer, which as released three games so far for the global markets.
- In this note, we talk about the positive aspects of the deal.
8. Raspberry Pi IPO Preview
- Established in 2012, Raspberry Pi is getting ready to complete its IPO in London soon. Raspberry Pi provides small, single-board computers.
- Raspberry Pi is backed by Sony and ARM Holdings. Nearly 72% of the company’s sales come from commercial customers embedding its products into various consumer devices and other systems.
- The company generated sales of US$265.8 million (up 41.5% YoY) and operating profit of US$37.5 million (up 87% YoY) in 2023.
9. Lalatech Holdings: FCF Growth Accelerated, Margins Improved, Fair Value May Be North of $10B
- Lalatech Holdings, a technology based global logistics company, has updated its application for Hong Kong IPO and disclosed financial results for 2023.
- Lalatech Holdings is aiming to raise up to $1B and the company’s IPO looks imminent in the coming months as cash flow growth accelerated, while margins and profitability improved.
- My fair valuation of Lalatech Holdings is close to $10B and investors should buy into upcoming IPO given the company’s substantial scale, massive network effects and operating efficiency.
10. Go Digit IPO Trading – Low Subscription Rate, Not All Shares Are Locked Up
- Go Digit General Insurance raised around US$315m in its India IPO.
- Go Digit General Insurance is a digital full stack insurance company, offering motor insurance, health insurance, travel insurance, property insurance, marine insurance, liability insurance and other insurance products.
- We have looked at the company’s performance in our past note. In this note, we talk about the trading dynamics.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.
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1. Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: 13% One-Way Turnover & US$2.27bn Trade
- Using data from the close on 17 May, there could be 5 changes to the Yuanta/P-Shares Taiwan Dividend Plus ETF in June.
- There will also be capping and funding flows that will lead to a one-way turnover of 12.6% and a one-way trade of US$1.13bn.
- Shorts have increased on the potential adds and potential deletes and covering will lead to rally in some stocks while providing support in others at rebalance implementation.
2. Carlyle To Take KFC Japan (9873) Private at ¥6,500/Share – Big Win For All, a Model Transaction
- Carlyle has a deal to buy Kfc Holdings Japan (9873 JP). ¥6,500/share is a 78% premium to undisturbed as a professional holder sells in an auction to the highest bidder.
- That’s a great format for achieving a great price. And we got one. This should get done easily.
- Importantly, the Bidco is named Crispy KK. It is 100% owned by Juicy KK. Juicy KK itself is 100% owned by Crispy Holdings L.P. Someone had some fun.
3. MUFG Cross-Shareholding – At Least US$20bn of Cross-Shareholding to Sell, Taking It Slow
- Following up on our earlier cross-shareholding notes, in this note we look at Mitsubishi UFJ Financial (MUFG) (8306 JP)’s cross-shareholding.
- MUFG had a stake over US$100m in at least 47 listed Japanese stocks, amounting to a total of around US$19bn.
- In this note, we take a look at its stakes in various companies to see which ones could possibly be candidates for further selldowns.
4. L’Occitane (973 HK): Who Owns What, And When
- A fortnight ago, I sought access to L’Occitane (973 HK)‘s lesser-known shareholder register, a byproduct of investigative disclosure reports under Chapter 571, s329 of the Securities and Futures Ordinance.
- This is the same register I discussed in Giordano (709 HK): A Closer Look At The Shareholder Register Ahead Of The SGM; and one also used by proxy solicitors.
- The register confirms what has been long rumoured about a certain shareholder activist. It is also informative for what isn’t present.
5. FSS Head’s Aggressive Remarks for Value-Up at NY Event, Incl. Short Selling Resumption Late June
- Lee Bok-hyun hopes for short selling to resume by late June. Given his influence on the Value-up policy, it’s likely to happen.
- Lee expects key tax incentives for the value-up program to be included in the July tax reform bill, showing a market-friendly stance.
- Yesterday’s New York event had a very positive atmosphere with more attendees than expected, showing genuine investor interest, likely ensuring sustained interest in Korea’s Value-up program.
6. July Short Selling Resumption in Korea: Local Market Info & Trading Considerations
- According to market information confirmed so far, the resumption is set for July 1st, and short selling will be restricted to the constituents of KOSPI 200 and KOSDAQ 150.
- The surge in trading volume likely stemmed from the return of long-short positions post-short-selling ban, leading to an overall market volume increase.
- Another critical factor is the buying pressure on value-up stocks resuming in early July. We should aim at the price impacts of intersecting long-short flows and value-up stock purchases.
7. Merger Arb Mondays (20 May) – L’Occitane, China TCM, SciClone, Malaysia Airports, I’rom, Hollysys
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads: Yichang HEC Changjiang Pharma (1558 HK), Hollysys Automation Technologies (HOLI US), QV Equities Ltd (QVE AU), Ansarada Group Ltd (AND AU), Malaysia Airports Holdings (MAHB MK).
- Lowest spreads: Chilled & Frozen Logistics Holdings (9099 JP), Mma Offshore (MRM AU), Great Eastern Holdings (GE SP), Mimasu Semiconductor Industry (8155 JP), Boral Ltd (BLD AU).
8. EOFlow (294090 KS): Suitably Pumped
- For a company that strives to improve people’s lives, investors in EOFlow (294090 KS) shares have mostly faced a world of pain over the past year.
- After Insulet Corp (PODD US) filed a lawsuit on the 8th August 2023, accusing EOFlow of misappropriating trade secrets, patent infringement, and trademark dilution, shares declined ~88% by year-end.
- Earlier this month, the courts quashed Insulet’s preliminary injunction. EOFlow is up 200%. Insulet is up 3% (?). And Medtronic (MDT US), EOFlow’s prior suitor, is no doubt weighing options.
9. Tax-Loss Selling in Australia 2024 – A Trade Basket [Updated]
- Three weeks after instantiation of Phase 1, the ASX200 vs LiquidBasket is +1.8% if you traded the basket VWAP the next day. vs LessLiquid it is +8.5%.
- Equal weight all names in the two is +3.1%. Trade VWAP over two days it is +0.7%, +7.6%, and +2.7%. So far things are OK.
- Next week one would add another basket, then in the last week of June, one would cover and reverse the trade and hold on for 30-40 trading days or so.
10. Chilled & Frozen Logistics (9099) Gone Ballistic – Reminder of Structure, Price, and Incentives
- In late March, AZ-Com Maruwa Holdings (9090 JP) made an unsolicited (“hostile”) bid for Chilled & Frozen Logistics Holdings (9099 JP) at a near 50% premium at ¥3,000/share.
- It traded through, then C&F ran a bid solicitation process, got four bids. Since the day AFTER that announcement, the stock is up 56%. We approach Alps Logistics multiples.
- This deal doesn’t get the split price benefit that HTS and Alps Logistics did. And it is a fundamentally different logistics business. And target management dynamics are different.